A Stock Is Selling for $32

question 21

Multiple Choice

A stock is selling for $32.70.The strike price on a call,maturing in 6 months,is $35.The possible stock prices at the end of 6 months are $39.50 and $28.40.If interest rates are 6.0%,what is the option price?

• A) $1.90
• B) $2.80
• C) $3.40
• D) $4.20

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Definitions:

Strawberry Production

The cultivation and harvest of strawberries, involving processes from planting to selling the fruit.

Economic Concept

Fundamental ideas or principles that form the basis of economic theory and practice, such as supply and demand.

Trade-off

The compromise between two desirable but mutually exclusive outcomes in decision-making.

Opportunity Costs

The expense incurred from not choosing the next most advantageous option during decision-making.